Posted:
Saturday, February 9, 2013
by Dylan Benson in
Labels:
Business

Recently I was talking to a friend of mine named Darrell
Seale, the Director of International Programs for Fixed Wing Sensor Programs at
the private defense contractor Lockheed
Martin. Now what does this have to
do with audio? Well actually, absolutely
nothing. However, this man negotiates
multimillion dollar deals for breakfast, and it got me to think, how does deal
making like this compare to deal making and negotiation to someone in the
entertainment industry?

Courtesy of The Dividend Pig

After Seale received his bachelor’s degree in Industrial
Engineering and Aerospace Engineering from Oregon State University, he did a lot
of satellite imagery work, and was a program manager as an officer in the US
Air Force. After that, he was
negotiating national and international deals for Lockheed Martin.

So what makes these negotiations different from that of someone
in the audio field? Well, Seale deals
with defense products (high tech military weaponry) and someone in the audio
field will be talking about who gets to record what. Price is also different. An extreme case in the audio world would be
Jay-Z’s $150
million dollar record deal back in 2008, but it is not uncommon for
Lockheed Martin to close a deal worth over three
billion dollars. Seale also informed
me that these negotiations could go on for months at a time.

Sniper Advanced Targeting Pod: Some of what Seale Negotiates. Courtesy of Lockheed Martin

Either way, negotiation is negotiation. How does Seale carry them out? When I asked him how he separates the people
from the problem, he said the biggest thing is actually being as transparent as
possible. He said you must keep all
personal aspects out, as this is all business.

While it was going to be my next question, he said Lockheed
Martin prides
itself on integrity. People have
been fired for lack of it. Dirty tactics
and/or tricks are not used. Everything
is in good faith. So what about if the
other party uses dirty tactics? Well, Lockheed Martin is not the only defense contractor out there. Lockheed has to make sure it keeps its
business. So they will try to make sure
deals work. However, they have been
known to walk away from billion dollar deals to protect the reputation of the
company.

When you are negotiating F35 jet fighters and such,
objective criteria must be important, right?
Well, the prices of these items and quotes from vendors are easy access
for another party to come by. The US
government actually requires Lockheed to go into a negation with open
books. This means the US government
wants to make sure that they know what every piece of everything they want buy
costs; even down to one screw or rivet.
Seale also mentioned that when dealing with unknowns, he will bring in
subject matter experts. He will also use
parametric estimates. For example: he
will say this new price is based off the fact that this technology is twenty
percent more complex then the previous technology.

Mutual benefits of the deals depend heavily on Lockheed’s
position and authority on the deal.
Sometimes the company will bid a zero percent margin because it will
either keep the production facilities running, or establish or continue
customer purchases. Other times, deals
are “take it or leave it”. Seale said it
comes down to two things: you have to know what the stance of your company is,
and you have to know what the customer wants.

I learned a lot about negotiation from Darrell Seale, and
not just about Lockheed Martin. The
numbers and products or services may be different from that of the
entertainment industry, but it comes down to the same principle: here is what I
have, how much are you willing to pay? The
art of negotiation.